Foreign commerce reaches worst levels in more than five years but surplus survives

The country’s foreign trade plunged 25 percent in February, compared to the same month last year, taking imports and exports to the lowest level in more than five years after months of consecutive declines.

Despite this plunge, the country still registered a surplus of US$53 million as lower exports also led to fewer imports.

Overall, US$4.06 billion worth of goods and services were exported in the second month of the year while US$4.01 billion were imported, the INDEC statistics bureau said.

The figures were reported as the Central Bank eagerly waits for the proceeds of April’s soybean harvest to bring some relief to the country’s foreign exchange accounts.

The February figures follow a trend that has been evident since June, when US$7.4 billion in exports were reported, leading to a surplus of US$1.4 billion.

Although part of this trend is considered to be seasonal, as the country’s second quarter is usually the best in terms of exports due to climate reasons, the year-on-year comparisons in several categories show there is a more sustained downward pressure on both exports and imports.

Grain sales, the country’s main source of fresh dollars, have been suffering from farmers’ stockpiling and a fall in global prices.

Yesterday, the CIARA-CEC grain exporting chambers said a 45 percent fall was reported last week in the yearly comparison for a total of US$247 million, US$200 million less than in the same week in 2014.

Grain exports in 2015 have suffered from a 32 percent plunge, totalling US$2.8 billion so far,

US$1.4 billion less than when compared with the same period in 2014.

Last week’s soybean prices at Rosario’s stock exchange were 27 percent lower when compared to a year ago, while farmers are also said to be speculating with a possible devaluation after the October elections and thus deciding to sell less whenever possible.

This has led to a reduction in the amount of dollars at the disposal of the Central Bank, which has in turn been more selective when approving import authorizations in order to sustain the country’s foreign currency reserves.

In the last three months — the least profitable period of the year for the agricultural sector part — the monetary authority has only allowed goods to enter the country for amounts just below the dollars obtained through exports, according to INDEC’s official figures. The US$53 million surplus shown this month followed US$73 million seen in January and US$74 million in December, strongly below the three or four digit surpluses that were once the norm.

Although neither soybean prices nor farmers’ attitude towards grain hoarding is expected to change much, the harvest season should relieve the Central Bank’s tight cash flows without needing to sharply devaluate the country’s currency before the elections.

The amount of dollars in the Central Bank’s coffers is just one of the consequences of foreign trade figures. Reduced commerce, according to many economists consulted by the Herald, has also led to a slowdown in economic output as factories struggle to obtain imported inputs and spare parts while some goods are not shipped to the country for fear of being stuck in customs for too long.

The farming sector is not the only one experiencing reduced sales abroad, INDEC’s figures showed yesterday. The decline was led by industrial goods, 27 percent down in the yearly comparison, totalling US$1.4 billion for the month.

In terms of imports, the country’s energy bills were significantly reduced, dropping 63 percent, compared to February 2014, reaching just US$317 million. Although the amounts involved were smaller, the country also gained less from its energy exports.

A drop in imports was also seen in spare parts for capital goods, which dropped 27 percent to US$832 million, while capital goods themselves were down 11 percent, reaching US$822 million in total, and intermediate goods saw a similar 11 percent fall to end at US$1.3 billion.